This case presents a dispute regarding
compensation claimed to be due from the plaintiff to the
corporate defendant under a contract for the provision of
"advisory services" in connection with the
plaintiffs effort to raise capital for clinical trials of
its pharmaceutical product. Presently before the Court is the
plaintiffs motion for partial summary judgment on its
declaratory judgment claim, and on the defendants
counterclaims.[1] In substance, the plaintiff seeks a ruling that it owes
the corporate defendant no compensation.

BACKGROUND

The evidence offered in connection with the
present motion, considered in the light most favorable to
Kenmare, provides the following facts. The plaintiff, Novelos
Therapeutics, has described itself as "a late stage
pharmaceutical development company that plans to patent, license,
manufacture, market, and sell new, proprietary, high value-added
drugs for cancer and other life-threatening diseases in North
America, Europe, and Japan." As of August of 1998, Novellos
was seeking capital to fund clinical trials of its first drug,
which it described as "a chemically synthesized,
biologically active compound . . . expected to capture a
significant share of the . . . market for immune system
modulators . . . and blood cell disorder drugs." The
clinical trials it planned at that time involved "patients
with cancer undergoing chemotherapy and suffering from
neutropenia, thrombocytopenia, and anemia, and patients with
myelodysplastic syndromes." In particular, Novelos sought to
conduct clinical trials using its technology "for treatment
of blood disorders known as cytopenias."

The defendant Kenmare Capital Partners, Ltd.,
describes its business on its letterhead as "investment
banking and technology assessment for biosciences." Its
promotional brochure elaborates: "Our services are
strategically focused at raising public and private capital for
our clients and maximizing shareholder value." The brochure
goes on to boast that Kenmare "has well established
long-term business relationships with underwriters of emerging
companies and institutions investing private capital." The
brochure identifies Kenmares principals as defendant Dennis
N. Caulfield, "responsible for investment banking," and
Virginia Rybski, "responsible for technology
assessment." Neither Kenmare nor its principals are, or were
at any relevant time, registered as broker-dealers or agents
under the Massachusetts Securities Law, G. L. c. 110A.[2]

Novellos and Kenmare entered into the agreement
that gives rise to this dispute on August 21, 1998. The parties
agree that Caulfield drafted the agreement, although Kenmare
offers evidence that Novelloss counsel reviewed the draft
and recommended changes, which the parties incorporated. The
agreement, in the form of a letter on Kenmares letterhead,
identifies Novellos as "the Company" and Kenmare as
"the Advisor." It recites its purpose, in an unnumbered
introductory paragraph, as follows:

This letter sets forth the basic terms
of the agreement whereby Kenmare Capital Partners, Ltd.
will act as exclusive advisor to the Company for the
Private Offering of its Securities or negotiating an
alternative transaction as defined in Paragraph (9).

Fourteen numbered paragraphs follow, providing
details of the contemplated transaction and of the compensation
to be due Kenmare under various scenarios. Paragraph 1 provides:

1. AMOUNT: A private offering of up to
$37,000,000 consisting of 12,119 shares of Common Stock
and terms described in the Term Sheet (the
Securities")(Exhibit A).

Paragraph 2, captioned "ESCROW
ACCOUNT," provides that "The private Offering will be
in three stages," with the first five million dollars for
"pre-clinical testing," the next ten million for
"Complete European Clinical testing and begin Phase 2 U.S.
Clinical testing," and the remaining twenty-two million for
"Complete phase 2 U.S. Clinical Testing and begin phase 3
U.S. Clinical Testing." Paragraph 3, labeled "CLOSINGS,
" provides that "The first closing shall occur no later
than one-hundred-twenty (120) days from the offering
Date for the first stage (I)," with the second and third to
follow, each thirty days after the offering date for that stage.
As to the latter two stages, however, "if any investor does
not exercise any rights to purchase . . . the Advisor shall have
ninety (90) days from the closing date to place any such
securities."

Paragraph 4, captioned "OFFERING
DATE," supplies the triggering date for the closing deadline
set in paragraph 3, providing that the parties agree "to use
their best efforts" to complete all necessary documents by
September 15, 1998, and that "The date all documentation is
completed shall be the Offering Date." The number of shares
to be outstanding as of the Offering Date appears in paragraph 5,
under "CAPITALIZATION." In paragraph 8, "BUSINESS
PLAN," the parties agree "to use their best
efforts" to prepare a five year business plan and estimates
of sales and earnings by September 15, 1998. Paragraph 8 goes on
to provide that "The Company will also provide any
information necessary for the Advisor to answer due diligence
questions from prospective investors in the Private
Offering." Paragraph 11, "FINANCIAL INFORMATION,"
specifies certain financial information that "the Company
will provide Private Offering investors," unless "the
Company is subject to the reporting requirements of the
Securities and Exchange Act of 1934," in which case
"this paragraph (11) will not apply." Under paragraph
13, regarding "REGISTRATION RIGHTS," the company will
file a registration statement upon demand of a majority of the
"holders of Private Offering Securities." Paragraph 12,
"TERM SHEET," incorporates the term sheet attached,
with "The final term sheet [to] be mutually agreed to after
the Advisor has received the Companys business plan."
It provides, however, that "the Advisor is authorized to
immediately begin the Private Offering on the terms" as
attached. Paragraph 7, "EXPENSES," provides that each
party shall bear its own "expenses of the Private
Offering," and that "The Companys Blue
Sky applications shall be made in such states and
jurisdictions as shall be requested by the Advisor and agreed to
by the Company."

Paragraphs 6, 9, 10, and 14 address
Kenmares compensation. Paragraph 6, "ADVISORS
COMPENSATION FOR PRIVATE OFFERING," provides for a
commission on a formula based on specified percentages "of
the gross offering price of the Securities," with payment
"at the closing for each stage," along with issuance at
that same time of warrants on specified terms.

In the event of the sale, merger or
joint venture of the Company or the sale or licensing of
any significant assets of the Company or the financing of
research and development and/or clinical evaluation
programs, as an alternative to the Private Offering
("the Alternative Transaction"); then, the
Company shall pay the Advisor, in the legal consideration
for the Alternative Transaction, whatever the form of the
consideration, the following: (a) the Private Offering
compensation as specified in paragraph 6(a) and 6(b) on
the first $37,000,000, (b) two percent (2%) of the
remainder, and (c) the Company shall receive ninety-four
percent (94%) and the Advisor six percent (6%) of any
licensing royalties.

Paragraph 10, captioned "ADVISORS
COMPENSATION AFTER CLOSING," provides a formula for
compensation to Kenmare in the event that "the Advisor is
not the exclusive Advisor for any subsequent offering or
transaction and if investors in the Private Offering or Offerees
. . . that do not invest in the Private Offering, purchase any
private offering securities, or any public offering securities
which are not underwritten, directly from the Company or from an
agent for the Company." Paragraph 10 goes on to provide,
however, that "these provisions shall expire three (3) years
from the closing of the last stage and the Company will have no
obligation to pay the Advisor compensation for any investments or
Alternative Transactions after the three (3) year expiration
date."

Finally, paragraph fourteen provides two
"SPECIAL PROVISIONS REGARDING ADVISORS
COMPENSATION," which it describes as "exceptions"
to the "Exclusive Advisor provisions of the agreement."
The first of these, 14(a), provides:

If the Company is responsible for
placing any part of the $37,000,000 Private Offering or
an Alternative Transaction, the Advisors
Compensation shall be reduced by fifty percent (50%) for
any compensation that would otherwise be due to the
Advisor without this exception.

Paragraph 14(b) provides for reduced
compensation in the event that "the Company is successful in
concluding its present negotiations with an investor interested
in investing the $37,000,000 as an alternative to the Private
Offering or in concluding its present negotiations for
self-funding through sales to an affiliate and either of those
events occur before the Advisor closes stage I Of the Private
Offering."

Appended to the agreement was a "Term
Sheet," setting out proposed terms of the private offering.
The term sheet specified the gross proceeds of the offering as
$37,000,000, the closing date as "On or before January 15,
1998,"[3] and provided certain terms of the offering. The term
sheet identified Kenmare as "Exclusive Advisor,"
specified "Advisory Fees" according to the formula in
the agreement, and provided that "Advisory fees will be paid
and warrants issued at each closing."

Kenmare proceeded to prepare first an executive
summary, and then the private offering memorandum. The latter
document, dated March 1, 1999, includes, under the caption
"Confidential and Proprietary," the recipients
undertaking that the information provided "are not to be
used for any purpose other than in connection with the
recipients consideration of the purchase of the Common
Stock . . . ." The memorandum goes on to recite that Kenmare
"is furnishing" it "solely for the consideration
of institutional and other accredited investors who have the
knowledge and experience in financial and business matters and
the capability to conduct their own due diligence investigation
and evaluation in connection with the investment," and that
"the Securities offered in this Memorandum are being sold as
a private offering . . . and accordingly, are not being
registered under the Securities Act . . . . The Securities
described herein are being offered to a limited number of
institutional and other accredited investors . . . . Neither this
Memorandum nor its delivery to any prospective investor shall
constitute an offer to sell or the solicitation of any offer to
buy the Company or its Securities." The memorandum indicated
that all inquiries should be directed to Kenmare. Also included
in the memorandum was a revised term sheet, similar to the
previous one, but showing gross proceeds of $30,000,000, with a
closing date of "On or before March 1, 1999."

According to Kenmares interrogatory
answer, "[t]he Executive Summary was completed on or about
September 11, 1998, and sent to several pharmaceutical companies
. . . . During the period September 11, 1998 to January 1999
Kenmare received responses from the pharmaceutical companies . .
. indicating no interest." The Private Offering Memorandum,
according to Kenmares answers to interrogatories, "was
intended to be a marketing document to solicit interest . . .
from the pharmaceutical companies for an Alternative Transaction
and secondarily for professional venture capital investors and to
be used as a document for Novelos to solicit individual private
investors." Caulfields affidavit elaborates, asserting
that Kenmare prepared the private offering memorandum
"intending it to be used more as a marketing document to
solicit interest in the Novelos technology from pharmaceutical
companies in regard to Alternative Transactions than in an
attempt to solicit private equity investors." This approach,
according to Caulfields affidavit, was because Caulfield
believed "that the $37,000,000 cost of clinical trials based
on the cytopenia strategy made the private placement of equity
securities unrealistic."

In February of 1999, Caulfield sent copies of
the memorandum, with cover letters, to potential investors.[4]
The cover letters asserted, variously, that Novelos "is
going to be a blockbuster and its initial investors are going to
enjoy real increase(s) in wealth," "[w]e believe that
this is an extraordinary opportunity to benefit society and
create wealth," "[o]ur objective is to complete the
deal either publicly or privately as quickly as possible,"
"I believe you will find this to be a very exciting
investment opportunity," and that "[d]ue diligence
files are available for review." The responses received were
uniformly negative, confirming Caulfields view, according
to his affidavit, that "the marketing strategy based upon
the use of the Novelos technology for treatment of blood
disorders was not a viable strategy. For that reason, both
parties allowed the original January 15, 1999 so- called
deadline for the first stage of a private placement
to pass notwithstanding the fact that no equity securities had
been placed. During January, February, March and April of 1999
the parties continued to work together under the frame work of
the August 21, 1998 Agreement towards the end of effectuating
Alternative Transactions for the benefit of Novelos."

According to Kenmares answers to
interrogatories, "between September 1999[5]
and July 1999 Kenmare sent about 219 Confidential Offering
Memorandums (sic) to pharmaceutical companies and venture capital
investment organizations and Novelos sent about 74 Confidential
Offering Memorandums (sic) to individuals and others for
investment and public relations purposes. Except for the
individual investors that Novelos solicited and who invested in
Novelos the response from the other solicitations . . . was not
interested . . . . In summary, the Executive Summary and
Confidential Private Placement Memorandum test market program
proved between September 1998 and July 1999 that the Novelos . .
. cytopenia clinical development strategy was a big loser."

Kenmares interrogatory answer goes on to
recite that on or about March 31, 1999, over Noveloss
objection, it published[6] its own review of certain information it had received
from Novelos, expressing the conclusion that "the data
clearly establishes that the United States clinical studies
should include non-small cell lung cancer and small cell lung
cancer with survival as an endpoint." Such studies, Kenmare
asserts, "would be a fraction of the cost of the cytopenia
indication." Kenmare prepared documents based on its newly
proposed approach, and submitted those documents to a potential
investor known as The Medicines Company. Novelos adopted the new
strategy, and The Medicines Company "used their proprietary
software to design a clinical development program" at a cost
of between two and three million dollars. Thus, according to
Kenmare, "Novelos received and accepted the intellectual
capital of Kenmare and The Medicines Company which intellectual
capital identified the non-small cell lung cancer indication and
created the design of the Novelos clinical development
program." According to Kenmares interrogatory answer,
Kenmares work thus "created real capital for Novelos
and Novelos received a benefit of about $37 million (cost of
cytopenia clinical development program) less about $3 million
(cost of the new Novelos clinical development program)."

Thereafter, however, in April 1999, according
to Kenmares interrogatory answer, Novelos informed Kenmare
that "Kenmare could present the non-small cell lung cancer
business plan clinical development program to pharmaceutical
companies and venture capital investors but Novelos planned to
continue with the cytopenia indication." Simyon Palmin
stated, according to Kenmares interrogatory answer, that
"The Medicines Company is not going to run Novelos
business and non-small lung cancer is a Kenmare strategy not a
Novelos strategy." Despite this position, according to
Kenmare, Novelos did adopt the non-small cell lung cancer
strategy, incorporating it into a "Proposed Development
Plan" dated May 27, 1999, and into a filing with the Food
and Drug Administration in August, 1999.

In July, 1999, according to Kenmares
interrogatory answer, "Novelos and Newcastle Pharmaceuticals
entered into an agreement for the purchase of the exclusive
cancer rights to the Novelos drug BAM-002 for $36.4 million . . .
. The private placement and Alternative Investment strategy was
pursued by Newcastle to obtain funding for Novelos until the
contract terminated on March 31, 2000."[7]

According to Caulfields affidavit, in
late August of 1999, Simyon Palmin told Caulfield "that he
wanted to rewrite the August 12, 1998 Agreement to
reflect the developments of the preceding year, meaning to me,
that he still considered the Agreement to be operative." On
November 23, 1999, according to Caulfields affidavit, Harry
Palmin, president of Novelos, faxed to Caulfield a proposed new
agreement. The proposal, a copy of which is appended to
Caulfields affidavit, is headed "Draft of Agreement
for Advisory Services to sell marketing/Distribution
Rights." It recites that "Novelos proposes to
compensate Kenmare for helping Novelos sell
Marketing/Distribution rights . . . to pharmaceutical
companies," at specified commission rates depending on the
relative roles of Kenmare and Novelos with respect to any
particular purchaser. The draft also indicates that "This
Agreement should supercede any previous agreements."
Although this proposal did not culminate in agreement, Caulfield
and Harry Palmin did agree, according to Caulfields
affidavit, "that Kenmare was entitled to some compensation,
in the area of $2,000,000, in consideration for the value of
Kenmares services in redirecting their clinical development
and business strategy."

On November 28, 1999, Kenmare sent Novelos an
invoice for its services in the amount of $4,646,675, plus
warrants for the purchase of 1,045 shares of Novelos stock.
Caulfields affidavit asserts that he sent the invoice
"[i]n order to expedite negotiations over the amount due
Kenmare." The invoice, in the form of a letter from
Caulfield to Harry Palmin, claimed that Novelos was entitled to
payment because "[o]ur advisory services are responsible for
the change in the Novelos Business Plan," and went on to
detail the advisory services for which Kenmare claimed credit.
The invoice identified the amount charged as consisting of three
components (a) a thirteen percent commission on $35,350,000 in
"Savings for Clinical Trials," resulting from the
change in strategy, (b) a commission of six and one half percent
on $795,000 in notes sold by Novelos to investors between August
21, 1998 and November 1, 1999, and (c) a commission on the sale
of rights to Newcastle Pharmaceuticals in the amount of thirteen
percent of the first $855,000 raised and two percent on any
additional funds raised. The invoice also asserted that Kenmare
would be entitled to commissions on any future transaction with
any pharmaceutical company with which it had "negotiated
Confidential Disclosure Agreements." Noveloss response
to Kenmares invoice, according to Caulfields
affidavit, was that "Novelos then considered the Agreement
to have terminated because no private placement had occurred by
January 15, 1999."

Kenmare believes, according to Caulfields
affidavit, that after the initiation of this litigation Novelos
has "engaged in Alternative Transactions" utilizing the
"business strategy Kenmare proposed in the Spring of
1999." Among these, Kenmare asserts, are a license agreement
with Phytera, Inc., in July, 2000, and sales of convertible notes
in August and October of 2000 to purchasers affiliated with
something referred to as the Masthead Entities. Novelos offers
evidence, which Kenmare does not contest, that Kenmare never had
any contact with either Masthead or Phytera on behalf of Novelos.
Kenmare contends that it would elicit evidence of additional such
transactions if permitted to conduct further discovery on this
topic.

In answer to Noveloss interrogatory
regarding the amount and basis of the compensation "to which
Kenmare claims it is entitled," Kenmare refers to its
invoice of November 28, 1999, reiterating the contentions and
calculations set forth there. Kenmares answer also asserts
that it provided certain additional services and advice, not
recited in the invoice, and that "[t]he work was performed
continuously from the date of the Advisory Agreement, August 21,
1998 to March 20, 2000 by Kenmare full time" with the
exception of ten days when Virginia Rybski was otherwise engaged.

Novelos brought this action on March 10, 2000.
Its complaint alleges fraud by both Kenmare and Caulfield (counts
I and II), and seeks a declaration that it owes Kenmare no
compensation under the contract (count III). After some initial
procedural skirmishes, Kenmare and Caulfield answered, with
Kenmare asserting a counterclaim for damages on theories of
breach of contract (count I), breach of the implied covenant of
good faith and fair dealing (count II), quantum meruit (count
III), unjust enrichment (count V), and violation of G. L. c. 93A
(count IV). Novelos now seeks summary judgment on its declaratory
judgment claim and on Kenmares counterclaims. It contends
that no compensation is due under the contract, on two
alternative grounds. First, Novelos contends that the contract
was void ab initio, pursuant toG. L. c. 110,

§ 410(f), because it provided for conduct in
violation of c. 110A, § 201(a). Second, Novelos contends that
even if the contract or some part of it were enforceable, Kenmare
would be entitled to no compensation under its terms because
Kenmare failed to accomplish the only task for which the contract
provided for it to be compensated  that is, the raising of
capital for Novelos. As to the other counterclaims, Novelos
contends that the existence of a contract for commission- based
compensation, under which no commission is due, precludes
recovery on any of the theories asserted.

DISCUSSION

This Court grants summary judgment where no
genuine issues of material fact exist, and the undisputed facts
entitle the moving party to judgment as a matter of law. Hakim
v. Massachusetts Insurers Insolvency Fund, 424 Mass.
275, 281 (1997); Cassesso v. Commissioner of Correction,
390 Mass. 419, 422 (1983); Community Natl Bank v. Dawes,
369 Mass. 550, 553 (1976); Mass. R. Civ. P. 56(c). The moving
party bears the burden of affirmatively demonstrating that there
is no genuine dispute of material fact on every relevant issue. Pederson
v. Time, Inc., 404 Mass. 14, 16-17 (1989). A party moving for
summary judgment who does not bear the burden of proof at trial
may demonstrate the absence of a triable issue either by
submitting affirmative evidence negating an essential element of
the nonmoving partys case or by showing that the nonmoving
party has no reasonable expectation of proving an essential
element of the claim at trial. Kourouvacilis v. General Motors
Corp., 410 Mass. 706, 716 (1991). Once the moving party
establishes the absence of a triable issue, the party opposing
the motion must respond and allege specific facts establishing
the existence of a genuine issue of material fact. Pederson,
404 Mass. at 17. "To avoid summary judgment, an opposing
party may not rely upon his pleadings or bald conclusions but
must set forth specific facts showing that there is a genuine
issue for trial." United States Trust Co. of New York v.
Herriott, 10 Mass. App. Ct. 313, 318 (1980); see also Trustees
of Tufts College v. Parlane Sportswear Co., Inc., 4 Mass.
App. Ct. 783, 784 (1976).

1. Application of G. L. c. 110A, § 410(f).

Chapter 110A of the General Laws regulates the
sale of securities in Massachusetts. Section 201 of c. 110A
provides that "[i]t is unlawful for any person to transact
business in the commonwealth as a broker-dealer or agent unless
he is registered under this chapter." Section 401(c) defines
"broker-dealer" as "any person engaged in the
business of effecting transactions in securities for the account
of others or for his own account," subject to certain
exclusions not applicable here.[8] The statute does
not define "effecting transactions." That phrase
derives content, however, from § 410(a), which imposes civil
liability on any person who "offers or sells a security in
violation of section 201(a)." "Offer" is defined
in § 401(i)(2) as including "every attempt or offer to
dispose of, or solicitation of an offer to bury, a security or
interest in a security for value." See generally, Commonwealth
v. David, 365 Mass. 47, 50 (1974); Giordano v. Auditore,
355 Mass. 254, 257 (1969) (discussing scope of statute).

No person who has made or engaged in
the performance of any contract in violation of any
provision of this chapter or any rule or order hereunder,
or who has acquired any purported right under any such
contract with knowledge of the facts by reason of which
its making or performance was in violation, may base any
suit on the contract.

The undisputed facts, as set out supra,
leave no room for doubt that the contract on which Kenmare bases
its claim provided for it to solicit investors for the purchase
of Novelos stock, and that Kenmare in fact did so, albeit
unsuccessfully, pursuant to the contract, for a period of over a
year. Further, the undisputed facts establish that Kenmare
engaged in that activity as its principal, if not sole, business,
during that period.[9] The contract thus provided for Kenmare to act as a
broker-dealer, although unregistered, in violation of § 201(a).
It follows that Kenmare may not "base any suit on the
contract."

Kenmare seeks to avoid this conclusion by
minimizing its activities in connection with efforts to sell
stock, and emphasizing instead its efforts to effectuate an
"alternative transaction," as defined in paragraph 9 of
the agreement. Under its plain terms, however, § 410(f) applies
to a contract that calls for conduct in violation of the statute,
regardless of the actual activities of the parties under that
contract. Here, there is no question that the contract called for
Kenmare to solicit investors to purchase Novelos stock. Section
410(f) thus renders the contract unenforceable, regardless of the
extent to which Kenmare actually did so.

Kenmares next argument is that even if §
410(f) would bar enforcement of the provisions of the contract
relating to placement of stock, it does not bar enforcement of
paragraph 14(a), under which Kenmare claims a commission for what
it seeks to characterize as "alternative transactions."
In support of this argument, Kenmare relies on Cadillac Auto
Co. of Boston v. Engeian, 339 Mass. 26, 30 (1959). The issue
presented there was whether a forum selection clause,
unenforceable under Massachusetts law as then existing, rendered
void the entire contract of guaranty in which it appeared. The
Court held that it did not, applying the general rule that
"[i]f the part of a contract . . . which is valid, can be
separated from that which is void, and carried into effect, it
may be done." Because "the clause in question goes only
to the method of settlement of disputes under the contract . . .
and does not impair the substantive rights under it," the
Court held the offending provision severable, and enforced the
remainder of the contract.

The difference between this case and Cadillac
Auto Co. of Boston is obvious. Here, the illegality is not a
minor provision relating solely to dispute resolution or some
other incidental matter; rather, the essence of the contract is
an agreement for Kenmare to do exactly what the statute
prohibits. See Green v. Richmond, 369 Mass. 47, 51 (1975)
("there can be no recovery if the performance was in fact
illegal, and the illegality was serious and not merely an
incidental part of the performance of the agreement").

More fundamentally, the severability doctrine
applied in Cadillac Auto is a rule of contract
interpretation, not one of statutory construction. The question
here is not what the parties meant in their agreement, but what
the legislature meant in enacting § 410(f). The answer to that
question is apparent in the plain language of the statute,
barring any suit "base[d] . . . on the contract." The
legislature did not limit the bar to those portions of a contract
that call for conduct in violation of the statute; rather the
plain language of § 410(f) bars any claim under the entire
contract. The purpose of such a broad rule is apparent; the
legislature sought to promote compliance with the statute, and to
deter its violation, by imposing severe and automatic
consequences. Accordingly, Novelos is entitled to judgment as a
matter of law on its claim for declaratory judgment, and on
counts I and II of Kenmares complaint, both of which are
explicitly based on the contract. Kenmares c. 93A claim
must fail as well, since it depends on the allegation that
Novelos refused to pay compensation due under the contract.

Kenmare contends that it remains entitled to
compensation for its services on theories of quantum meruit and
unjust enrichment. Its argument, in substance, is that even if it
cannot obtain a commission under the contract on capital raised,
Novelos is obligated to pay it for the value of the business
advice it provided. To prevail on this theory, Kenmare would have
to show that Novelos reasonably should have expected to pay for
Kenmares business advice, apart from any commissions that
Kenmare would have been due under the contract. See J. A.
Sullivan Corp. v. Commonwealth, 397 Mass. 789, 795 (1986); Lattuca
v. Cusolito, 343 Mass. 747, 752 (1962); Community
Builders, Inc. v. Indian Motorcycle Associates, Inc., 44
Mass. App. Ct. 537, 560 (1998). The evidence offered is devoid of
anything to indicate that Kenmare could make that showing at
trial. To the contrary, the undisputed facts, considered in the
light most favorable to Kenmare, indicate that the parties agreed
to payment only pursuant to the contract, in the form of
commissions on capital raised by means of the sale of stock or
the alternative transactions specified in the contract, and that
Kenmare provided its services in the context of its effort to
perform the contract. Under these circumstances, recovery on the
alternate theories proposed would be indistinguishable from
enforcement of the contract, which the statute prohibits.
Accordingly, Novelos is entitled to judgment as a matter of law
on counts III and V of Kenmares counterclaim.

CONCLUSION AND ORDER

For the reasons stated, it is hereby ordered
that Novelos Therapeutics, Inc.s Motion for Partial Summary
Judgment is ALLOWED.

Judith Fabricant

Justice of the Superior Court

June , 2001

FOOTNOTES:

[1]After two hearings on the present motions, defendants
informed the Court that, prior to either of those hearings,
defendant Caulfield, but not Kenmare, had filed a petition for
bankruptcy protection, triggering the automatic stay of claims
against him under the bankruptcy code. Accordingly, the Court
will address the present motions only as to Kenmare, and not as
to Caulfield.

[2]The parties dispute whether Novelos knew, at the time of
the contract, that Kenmare was unregistered. Caulfield asserts in
his affidavit that he made repeated full disclosure, and that he
relied on legal advice from Noveloss attorney, conveyed to
him through Simyon Palmin of Novelos, that "so long as we
left the price and quantity terms blank in any offering
documents, that those documents would not constitute an Offering
for purposes of the Blue Sky Act, and that therefore neither
Novelos nor Kenmare would be violating the Act." Palmin
asserts in his affidavit that he believed Kenmare and Caulfield
to be "legally authorized to conduct the offering and sale
of securities," and that Novelos relied on that belief.

[4]The cover letters refer to the enclosure as a
"prospectus," but the record identifies no document to
which this term might refer other than the Private Offering
Memorandum.

[5]This date appears inconsistent with the other
information provided, but the record does not clarify.

[6]Kenmares use of the word "published"
leaves some uncertainty as to whether it made the report public,
over the objection of its own client, or merely released it to
Novelos and other entities involved with Noveloss business.

[7]The record provides little additional explanation of
this transaction. The parties references to it suggest that
it did not actually generate any capital for Novelos, but rather
involved an undertaking by Newcastle, apparently unsuccessful, to
attempt to raise capital through the resale of rights.

[8]One of the exclusions is "an agent," which the
§ 401(b) defines as "any individual other than a
broker-dealer who represents a broker-dealer or issuer in
effecting or attempting to effect purchases or sales of
securities," subject to certain exclusions. At the second
hearing on these motions, after initially attempting to
characterize itself as an agent, Kenmare acknowledged that it
cannot fall within that definition, since it is not an
"individual."

[9]Kenmare suggests that it was not "in the
business" of effecting such transactions, because "the
transaction contemplated by the Agreement was the only such
transaction Kenmare has ever been involved in." As a
business corporation, however, Kenmare can hardly avoid the
conclusion that it was in the business of the activity that
occupied virtually all of its effort.

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